Turning Japanese?

Client Talking Points

Pump It To QuadrillYen

The Bank of Japan’s announcement this morning will most likely have the people of Japan cringing for what their future has in store for them. The Yen rallied +1% on the news that the BOJ would target “2% inflation” and would buy assets that range from Scooby Doo action figures to European bonds. In lieu of this, Japanese stocks snapped their immediate-term TRADE support for the first time in months. People who are short the Yen this morning are probably grimacing as they realize their timing couldn’t be worse. Shinzo Abe and Taro Aso have a lot more fun in store for those involved in the Currency Wars. If this story with the Bank of Japan seems familiar, it’s probably because we’ve done the old asset purchase shuffle here in the U.S. a bunch of times. 

America Rules

American’s should be feeling pretty good about what’s going on in our country right now. Our Macro Theme of #GrowthStabilizing is taking hold as the housing market and the labor market show significant improvements. And look at the stock market. Five-year highs in the S&P 500 and brand new highs in the Russell 2000? The retail crowd will certainly smile at that news. Fantastic. Just remember that the markets go up until they don’t. Things can change overnight and we can go right back to the starting line without finishing the race.

Asset Allocation

CASH 55% US EQUITIES 12%
INTL EQUITIES 18% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 15%

Top Long Ideas

Company Ticker Sector Duration
ASCA

We believe ASCA will receive a higher bid from another gaming competitor. Our valuation puts ASCA’s worth closer to $40.

ADM

ADM has significantly lagged the overall market in 2012 over concerns that weakness in the company’s bioproducts (ethanol) and merchandise and handling segment will persist. Ethanol margins suffered from higher corn costs, as well as weak domestic demand and low capacity utilization across the industry. Merchandising and handling results were at the mercy of a smaller U.S. corn harvest. Both segments could be in a position to rebound as we move into 2013 and a new crop goes into the ground. With corn prices remaining at elevated levels, the incentive to plant corn certainly exists, and we expect that we will see corn planted fencepost to fencepost.

HOLX

HOLX remains one of our favorite longer-term fundamental growth companies given growing penetration of its 3D Tomo platform and high leverage to the 2014 Insurance Expansion from the Affordable Care Act.

Three for the Road

TWEET OF THE DAY

"Only 32% Are Aware If Their State Is Establishing A Health Care Exchange... tinyurl.com/33lscbm#healthcare" -@RasmussenPoll

QUOTE OF THE DAY

“I never think of the future - it comes soon enough.” -Albert Einstein

STAT OF THE DAY

Bank of Japan announced Tuesday it would switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent.


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